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If you are in debt and struggling to get out, there are six very dangerous words that may affect your financial future in significant ways. If you hear these words, put up your guard, and question carefully whether they are true.

Before I tell you what those words are, let me first state that I am not a bankruptcy attorney or credit counselor, and I don’t run a debt relief firm. I consider myself first and foremost an educator, and my goal for the last twenty+ years has always been to try my best to provide consumers with reliable answers to their credit questions. The method they choose to resolve their debt problems makes no difference to me personally.

With that out of the way, here are those six dangerous words:

“Bankruptcy should be your last resort.”

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By taking these words to heart, many consumers have caused themselves needless heartache and enormous financial pain. Yet, these words are perpetuated by the news media, financial advisors, and creditors every day. (I am sure I’ve said them myself!) Sometimes those stating this “fact” are well-meaning in their advice, but at other times they have their own agenda that may be at odds with you getting the help you need.

Here are the some of the possible repercussions of taking these words to heart:

1. Your health will suffer. I can’t tell you how many people I’ve spoken with have become physically ill due to their financial difficulties. They don’t sleep, their stress levels are sky high, and they often suffer from depression. Some turn to alcohol, overeat, or find other unhealthy ways to self-medicate. Ironically, when people are under financial stress, they may also be unable to pay for the medical care they need, which only makes the problem worse. If that sounds like you, consulting a bankruptcy attorney can help. Even if you decide not to file, it will allow you to put some of your “what-if” questions to rest. Questions like, “What if I can’t pay the mortgage/credit cards/car payment? What can they do to me?” deserve an expert answer.

2. You will make expensive, and sometimes irreversible, financial mistakes. Nothing is as heartbreaking as talking with someone nearing retirement age who has cashed out their retirement savings to make payments on credit cards, only to find they have to file for bankruptcy anyway. Or to hear from someone who kept paying on an unaffordable mortgage while essential expenses, like medication or the car payment, went unpaid. These mistakes may only compound the problem and make it last a lot longer.

[Related Article: 7 Tips to Rebuild Your Credit Score After Bankruptcy]

3. You will be easily misled. You’ll likely spend a lot of time on the internet researching your options. Or, less likely, you may talk to friends or relatives. And you’ll probably get some bad or misleading advice in the process. You might think, for example, that you can’t file for bankruptcy because you make too much money. But bankruptcy laws are very specific to your state and your situation. Only an attorney can tell you how they apply to you.

4. You will remain stuck where you are. When writing my latest book, Reduce Debt, Reduce Stress, I interviewed a couple of people who filed for bankruptcy and described that as a turning point in their lives. (Yes, I also interviewed people who didn’t go that route.) After they filed, they were able to take stock of their lives and made important changes they couldn’t have made while they were still on the treadmill. They are now leading much happier, successful and productive lives. Sometimes bankruptcy, like a serious illness, is a wake-up call. The bankruptcy code is there for a reason—to give consumers a fresh start.

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The decision to file is not an easy one to make. It’s certainly not one to be taken lightly. And it is important that you consider all your options for resolving your debts. You may have other options, such as credit counseling or negotiating with creditors, that can allow you to resolve your debts and avoid filing.

But even if you think bankruptcy is your last choice for dealing with your financial problems, you shouldn’t put off talking with an attorney until the last minute.

Image: red hand records, via Flickr

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  • Louella Riodricks

    Great article very educative I enjoyed reading it and may put some of it to practice.
    Thank you again,. Louella

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  • http://www.debtconsolidationcare.com/reporter/michael/index.html Michael

    This article highlights some of the very concerns I have dealt with while working with consumers who struggle with debt. The decision to avoid bankruptcy is often clouded by emotion and misinformation.
    The decision to file bankruptcy should start with focusing on the numbers involved.
    A simple mathematical exercise provides a process of elimination that will lead to a logical conclusion of whether to avoid bankruptcy or embraces it.
    Over the years of consulting with people struggling to make all of their monthly bills, this process of elimination has shown that roughly 30% of the people I have worked with (many thousands) should file bankruptcy and start living for tomorrow rather than paying for yesterday.

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